Kuala Lumpur: The latest United States (US)-China tariff rollback will impact Malaysia’s glove makers, delaying purchasing decisions due to ongoing uncertainty, said Maybank Investment Bank Bhd (Maybank IB).
According to BERNAMA News Agency, the investment bank noted that reversing the previous tariff schedule on China-made gloves hinges on ongoing negotiations. Although the temporary tariff rollback might not lead to a more competitive rate for Chinese glove makers, the uncertainty could prompt customers to adopt a wait-and-see approach, delaying purchasing decisions and slowing sales. New capacity from Chinese glove makers in Southeast Asia, expected from 2026, poses supply risks that may pressure volume and average selling prices.
The US and China have agreed to reduce tariffs for 90 days. Under this agreement, the US will cut the tariff imposed on China imports in April 2025 from 145 per cent to 30 per cent, starting May 12, 2025. China will also lower the tariff on US goods to 10 per cent from 125 per cent, with revisions effective from May 14 to Aug 12, 2025.
Hong Leong Investment Bank Bhd (HLIB) highlighted that Chinese nitrile glove makers are unlikely to recapture US demand from Malaysia and Thailand despite the recent agreement due to persistent high landed price disadvantages. Before the April 2025 tariff, Chinese glove makers sold generic medical nitrile rubber gloves at US$15 per 1,000 pieces. However, with a 195 per cent US tariff, this price increased to US$44.25, compared to Malaysia/Thailand’s US$17.6-18.7 with a 10 per cent US tariff. After the recent tariff reductions, Chinese gloves’ landed price is expected to drop to US$27 with an 80 per cent US tariff, still uncompetitive against Malaysian/Thai alternatives.
Chinese vinyl gloves were selling at US$9-10 per 1,000 pieces before the April 2025 tariff. With the 145 per cent tariff, the landed price was US$22 to US$24.50, higher than Malaysian/Thai alternatives. However, under the new 30 per cent tariff, vinyl’s landed price is expected to fall to US$11.7 to US$13, significantly recovering from their previous non-competitiveness.
HLIB suggests that vinyl’s lower landed price could result in a demand shift from vinyl to nitrile rubber gloves, which would help absorb excess supply from China’s largest glove producer. There is still potential for a gradual demand shift away from vinyl to nitrile rubber gloves by US buyers, mainly benefiting Malaysian producers, should the ongoing 90-day tariff negotiations conclude unfavourably.
Meanwhile, CIMB Investment Bank Bhd believes US buyers will adopt a wait-and-see approach, resulting in softer demand and lower purchase volumes for Malaysian glove makers. This situation is expected to persist until June 2025, maintaining a neutral rating on the sector.